The Secretary Ministry of Megapolis andWestern Development, on behalf of the Government of Sri Lanka, together with the Urban Development Authority (UDA) and the CHEC Port City Colombo (Pvt) Ltd (the Project Company) signed a Tripartite Agreement for the development of a new Colombo International Financial City (CIFC), replacing the Agreement signed by the former Government on 16th September 2014 for the construction of a Port City.
The Tripartite Agreement encompasses the vision of His Excellency the President and the Hon. Prime Minister of Sri Lanka to create a new international Financial City in Colombo, to be governed under a new Act titled Colombo International Financial Centre Law, to be introduced in Parliament shortly. This Act envisages the creation of an “International Financial Zone” within the land area to be reclaimed by the Project Company. The Financial Zone will create an environment to attract the international financial services industry by attracting reputed international banking and financial services companies to locate within the CIFC. This initiative, together with the development plans envisaged for the entire reclaimed land area, is expected to have far reaching economic benefits to Sri Lanka and the creation of higher-paying service sector jobs.
The Tripartite Agreement has many features that are beneficial to Sri Lanka that was lacking in the 2014 Agreement that is now being replaced. Firstly, the Project Company will not be granted any freehold land as envisaged under the Agreement entered into by the previous Government. All lands to be allocated will be on leases executed by the Government and under no circumstances will the Project Company get any land for a lease period of more than 99 years. Furthermore, when the Project Company attracts investors to its lands, such lands will be leased to such third party investors also on a 99-year lease executed by the Government.
Additionally, the entire reclaimed area of 269 hectares will be first declared as territory of Sri Lanka under the Lands Ordinance by His Excellency the President. Thereafter the reclaimed area will be declared as an area of authority under the UDA Act and/or the proposed CIFC Law.
Many other benefits have been secured by the Government for the benefit of the general public and the country’s economy. In particular, the following areas can be highlighted as more favourable conditions obtained after detailed negotiations between this Government and the Project Company:
1. The lands used for public purposes such as roads, parks, pedestrian walkways etc. has been increased by 44% from 63 ha to 91 ha. This has been the primary reason for the expansion of the reclaimed area from 233 ha as contained in the 2014 Agreement to the current 269 ha. This means that lands allocated to the Government for use by the general public is 91ha and for purposes of development and investment is 62 ha.
2. Of the public areas identified 45 ha has been devoted to parks for use by the public. This is an area 8 times larger than the 5.7 ha available at Galle Face Green. In addition, the project will create 13 ha of beach areas also for public use.
3. A suitable land area will be developed as the CIFC. In fact, the new Agreement states that the Project Company is willing to consider an additional investment to construct this building, upon the feasibility study being concluded in consultation with the Government.
4. The previous agreement placed the entire burden of providing utility and infrastructure connections to the periphery of the reclaimed area on the Government. (All infrastructure within the reclaimed area will be built by the Project Company.) Under the new Agreement being signed today, the Government has the right to request the Project Company to enter into a Public-Private-Partnership for the provision of such infrastructure.
5. Under the previous Agreement, the maintenance of the reclaimed area and associated infrastructure therein was a responsibility assigned to the Government/SLPA. Now, a new JV company between the Project Company and a party to be nominated by the Government will undertake the Estate Management responsibility on self-financing basis.
6. The 2014 agreement placed restrictions on the possible developments to be undertaken on marketable lands allocated to the Government for 3 years after the reclamation. Under the new agreement, this restriction has been relaxed so that the GOSL can without any restriction commence development of exhibition & convention centres, hospital and medical facilities etc.
7. The 2014 agreement placed the entire financial burden of implementing the environmental studies and the fishermen’s income support program on the SLPA. Under the new Agreement, the Project Company will meet all costs incurred by the Megapolis Ministry in undertaking the environmental studies (including studies already completed) and allocate Rs.500 million to meet the costs of the fishery community livelihood improvement program.
It should also be pointed out that the suspension of the Project was a result of incomplete environmental study. This was rectified by this Government via a comprehensive new Supplementary Environmental Impact Assessment study. This study further restricted the area from which sand could be obtained to more than 3-4 km from the shoreline and sand to be dredged by scraping the sandy areas of the ocean floor only up to a depth of 3 meters (leaving at least ½ meter of sand at the ocean floor), and at areas where the water depth is more than 15 meters. Therefore, this will eliminate any possibility of coastal erosion. Moreover, the new Development Permit issued by the Department of Coast Conservation in 2016 contains 70 conditions designed to protect the environment (almost double the number of conditions issued under the 2011 Permit)
Importantly, as a consequence of the goodwill generated after the visits to China by His Excellency the President and the Hon. Prime Minister, the Project Company has already issued the required written undertakings to withdraw all compensation claims submitted to the Government thus far, effective from the signing of the new Tripartite Agreement.